Asia manufacturing hubs vulnerable to supply chain and climate risks

FM Global’s latest resilience index reveals that key manufacturing centres in Asia are exposed to high levels of climate and supply chain risks. In a year marked by supply chain disruption, the 2022 FM Global Resilience Index gives insights into which countries have proved most resilient during the pandemic. Western European countries dominate the resilience ranking, with Denmark, Switzerland, Luxembourg and Germany among the top five. They are joined by Singapore in fourth position. All of the top five countries performed strongly on economic factors, healthcare expenditure, climate risk quality and supply chain visibility in 2022, contributing to their high overall ranking. The bottom three countries – Chad, Venezuela and Haiti – are unchanged since last year’s resilience index and are ranked lower due to climate risk exposures and risk quality factors as well as economic factors. The UK is ranked 13th, while the three regions of the US covered by the index are ranked sixth, 11th, and 14th. China’s three regions are in 64th, 71st and 77th place. This year’s index, which has been expanded to include pandemic and ESG risk factors, also identifies the countries most exposed to supply chain delays and climate risks. China, India and Vietnam are all ranked low for both climate risk exposure and climate risk quality. However, Singapore, Japan and Korea, while exposed to high catastrophe risks, performed strongly in terms of climate and supply chain resilience. China, Taiwan and Vietnam all performed well for supply chain visibility – in 29th, 27th and 38th position, respectively – but not so well when it came to supply chain timeliness (29th, 39th and 38th). However, other Asian powerhouses fared better when it came to supply chain resilience. South Korea, Singapore and Japan also scored well for both supply chain transparency (24th, 10th and 12th) and timeliness (27th, 6th, and 10th). By comparison, Germany, the UK and Denmark appear in the top five for supply chain visibility and supply chain timeliness. Asian countries scored particularly poorly for climate risk exposure, dominating the bottom of the list. China, which is split into three regions, is ranked 105th, 113th and 120th out of 130 countries, while Taiwan is 122nd, Korea 110th, Japan 114th and Vietnam 121st. When it comes to climate resilience, China’s three regions are also ranked low down at 92nd, 90th and 58th, while Vietnam is 93rd. In contrast, Japan is ranked 31st, while Taiwan and Korea are in 40th and 53rd place respectively. While the Index data pre-dates the war between Russia and Ukraine, it does reflect growing tensions between the countries in recent years. In this year’s index, the rankings for sanctions-hit Russia and war-torn Ukraine tumbled. Russia dropped 11 places down this year’s ranking for political risk, while Ukraine is in the bottom 10%, where it has resided for the past ten years. Russia and Ukraine are both in the bottom 10% of the rankings for energy resilience. Russia is a major supplier of energy, fertiliser and industrial metals, while Ukraine is an important market for cooking oils and wheat, as well as automotive parts. The knock-on effect of the war on the cost of energy and food will hurt lower-income countries, while cyber risk has escalated, both in actual and threatened attacks, FM Global says. Ukraine and Georgia, both targets of Russian cyberattacks in the past, have seen their cyber resilience rankings fall 28 and 47 places, respectively. The FM Global Resilience Index scores and ranks countries by 15 economic, risk quality and supply chain measures that offer insights into a country’s resilience and vulnerabilities. The interactive online tool, which notches up almost 20,000 visits per year, enables risk managers to slice and dice, and compare data for 130 countries and territories on a range of measures including climate, cyber, fire risk, political risk, corruption and energy dependency. These insights can be used to inform strategic decisions, such as where to site new facilities, evaluate supply chains, assess business risk, and perform due diligence for mergers and acquisitions. The latest version of the index includes a number of new measures for 2022. In order to acknowledge pandemic risk and resilience, the 2022 index now includes supply chain timeliness and health expenditure. It also includes enhancements to the index that are complementary to organisations’ efforts to build climate resilience and report on ESG risks. In particular, the index now measures climate risk exposure (which reflects the risks of severe storms and floods) and climate resilience (which reflects building codes). Due to the availability of better-quality data, the Resilience Index now contains improved measures for cyber risk and energy intensity, broadened from fossil fuels to include renewable and clean energy sources. According to Pentti Tofte, staff senior vice-president, data analytics, FM Global: “Building resilience to achieve long-term sustainable outcomes is critical to business success, whether adjusting to war, navigating a pandemic, dealing with the threat of a changing climate, or meeting ESG demands. The 2022 FM Global Resilience Index is designed to support senior executives with preparing for – and adapting to – a dynamic risk landscape and to building business resilience responsibly.”

Asia manufacturing hubs vulnerable to supply chain and climate risks

Want to read this article?

Read Next

Swedish risk managers told to focus on flexibility rather than resilience

European Parliament votes for ‘hard-fought compromise’ on CSDDD

Rates fall in most regions during Q1 but rise in Europe and US: Marsh

Major cyberattack would hike rates but insurers would ‘brush off’ losses: Lockton Re

Chubb says Q1 saw ‘best rates’ as it books $2bn profit

Swedish risk managers told to focus on flexibility rather than resilience

European Parliament votes for ‘hard-fought compromise’ on CSDDD

Rates fall in most regions during Q1 but rise in Europe and US: Marsh

Major cyberattack would hike rates but insurers would ‘brush off’ losses: Lockton Re

Chubb says Q1 saw ‘best rates’ as it books $2bn profit

Want to read this article?

Read Next

Swedish risk managers told to focus on flexibility rather than resilience

European Parliament votes for ‘hard-fought compromise’ on CSDDD

Rates fall in most regions during Q1 but rise in Europe and US: Marsh

Major cyberattack would hike rates but insurers would ‘brush off’ losses: Lockton Re

Chubb says Q1 saw ‘best rates’ as it books $2bn profit

Related Articles